Economic development, population growth, and improvements in energy efficiency are key factors behind the evolution of energy demand. The Gulf Cooperation Council (GCC), an economic union that includes six countries, has experienced rapid economic and population growth over the last few decades. This has led to rapid growth in final energy consumption, which increased at an average annual rate of 6.8% between 2004 and 2014. Using a newly constructed dataset, we undertake a benchmarking exercise for energy efficiency in three sectors across the six GCC countries. With an energy demand framework, corrected ordinary least squares, an econometric approach, is used to estimate underlying energy efficiency trends for three key energy consuming sectors: residential electricity, road transport gasoline, and manufacturing aggregate energy. Our results reveal that relative underlying energy efficiency in the GCC countries has witnessed limited improvements, and has deteriorated in some cases. This has likely contributed to the region’s rapid energy demand growth. However, recent implementation of energy efficiency standards and regulations, combined with energy price reform, should lead to considerable energy efficiency improvements in the future, which is likely to dampen the rapid growth rates in energy consumption that the region has witnessed over the last few decades.
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